Southwest Airlines offers no frills flying at lower prices than non-
             discount airlines. The company has made it possible for more people to fly
             than ever before possible because of its lower fares. The company views
             its competition as not just other airlines, but also a variety of travel
             substitutes. When it set its initial prices, it based prices on what bus
             companies and rental car agencies had set for trips of comparable distance
             (Pricing: a practical example). Other analysts even suggest that Southwest
             faces threats from improved high-speed railways, telecommunications, e-mail
             and teleconferencing (Southwest Airlines Co.). Southwest constantly looks
             outside its industry at other modes of transportation to determine its
             pricing policies. Southwest maintains its competitive edge by knowing
             exactly what people are willing to pay for a ticket before they will seek
             out options other than flying (Pricing: a practical example).
             The demand for Southwest's service is very price elastic. The
             consumer continues to seek convenience and time savings. Flying, rather
             than driving, will meet that need if the price is right and the airline is
             reliable (Southwest Airlines Co.). Southwest's major challenge is to keep
             costs down so that it can still offer low prices and turn a profit. Here,
             factors such as labor costs, fuel costs, government regulations, safety
             requirements and facility taxes all threaten Southwest's cost structure.
             Southwest should continue using a cost leadership strategy to
             underprice competitors and to create new market demand (Southwest Airlines
             Co.). In this endeavor, frequent point-to-point flights are the most
             suitable business model for strategy execution. Southwest also needs to be
             a leader in technological innovation to contain costs.
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